Sometimes highly successful execs look back on last 10-20 years and realize they forgot to invest or optimize

Smart and consistent early investing pays off in decades

Compound returns/interest are the 8th Wonder of the World

Some of the smartest, most successful people I know have fumbled the ball on investing.

Work 10-20 years and do not pay attention to your investments, IRA’s, old 401k’s and then one day you look and realize you missed a grand opportunity.

Compound interest is the 8th wonder of the world.

I’ve run into a few people lately that were just too busy to pay attention. It's never too late to start investing, but it’s a tragedy if you miss a decade or two!

Time in the Market

Consider this:

Max your 401k at $23,500 per year, and (2) Save an extra $2000 per month.

Then:

$5 million in 25 years (assume 10% return). Enough for most people to comfortably retire!

76% of that money is from EARNINGS!

Now consider you start 10 years later:

$1.65 million

Investing 10 years later is life changing.

You only have $1.65m or 33% of the amount you would have had starting earlier

Time in Market!

This one is for fun (and illustration)

Age 25 save $23,500/ year in 401k.
Invest $1000/ month extra. I.e. in addition to 401k.
Every year increase your monthly extra investment by $1000. So $12,000 in year one, $24,000 in year 2, etc… many will complain and say “not possible”.

By the time you are 50 you should be earning big bucks and be able to save an extra $300k per year).

529 College Saving Plans

My daughter just started at the University of Miami, so I have been thinking a lot about 529 College Savings accounts, and unfortunately, it is a similar story:

Many parents wait too long to invest in a 529. The power of a 529 is “Time in the Market”.

PLAN A: Invest $500/ month from day 1 until child is 18.

PLAN B: Invest same amount of “total” money, but $1000/ month from age 9 to 18:

Plan A yields $120,000 more with the same amount of money

RSU’s and Stock Comp

Instead of “Time in Market” this is about “Diversification”.

Most executives are paid a large % of their compensation in RSUs (i.e. stock). The problem here is when those RSU’s vest, people fail to diversify their portfolio.

Now this is fine, if you happen to be one of the lucky few working in a Mag 7 company (Amazon Alphabet, Apple, Meta, Microsoft, Nvidia, Tesla) or other phenomenal companies.

Why do executives choose to keep their eggs all in one basket? It's not usually on purpose, but simply from not taking the time to carefully evaluate their portfolio and goals.

But consider this. If you simply sold those RSU’s and invested in the S&P 500, or maybe took a little more risk and invested in a tech ETF like Vanguard Technology (VGT), then your investment would look like this after 20 years(i):

$100,000 investment in the S&P 500 or Tech ETF 20 years ago, is now worth $770,000 or $1,800,000, respectively(i).

(i) S&P 500 and Tech ETF (VG) 20 year annualized returns are 10.7% and 15.5%, respectively.

Now lets’ say those RSU’s keep vesting at $50,000 per year and you are able to allocate $25,000 to the same two funds.

Your Nest Egg has now grown to almost $7 million!

Those are wonderful and relatively low-risk returns! Lower risk because you are diversified across 100’s of companies.

In Summary

Please take some time to look at your investments and make sure you are putting money away consistently. Be patient and you’ll thank me in 10-20 years.

It's not hard for people to become multi-millionaires, but it's important to start early and be consistent.

Don’t be the guy on the right.